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94 Corporate Finance BRILLIANT’S

(h) Cash receipts from future contracts, (h) â`yMa H$m°ÝQ´>oŠQ²>g, \$m°adS>© H$m°ÝQ´>oŠQ²>g, Am°ßeZ
forward contracts, option contracts and H$m°ÝQ´>oŠQ> Ed§ ñd¡n H$m°ÝQ´>oŠQ> go H¡$e [a{gQ²>g (S>rqbJ
swap contracts (except when the `m Q´>oqS>J CÔoí` Ho$ H$m°ÝQ´>oŠQ²>g go àm{ßV`m§ AWdm
contracts are held for dealing or trading
\$m`ZopÝg¨J EpŠQ>{dQ>rO H$s loUr H$s àm{ßV`m| H$mo
purposes, or the receipts classified as
financing activities). N>mo‹S>H$a)Ÿ&
Cash Flows from Financing Activities \$m`ZopÝg¨J EpŠQ>{dQ>rO go H¡$e âbmoO
Financing activities are those which \$m`ZopÝg¨J EpŠQ>{dQ>rO do EpŠQ>{dQ>rO h¢ {OZHo$
result in changes in the size and composition H$maU {H$gr B§Q>aàmBO Ho$ Am°Za H$s H¡${nQ>b (H$ånZr
of the owner's capital (including preference H$s Xem _| {à\$a|g eo`a H¡${nQ>b H$mo gpå_{cV H$aVo
share capital in case of a company) and hþE) H$s gmBO Ed§ H$ånmo{OeZ _| n[adV©Z hmoVm h¡Ÿ&
borrowings of the enterprise. The separate
\$m`ZopÝg¨J EpŠQ>{dQ>rO go CËnÝZ hmoZo dmco H¡$e âbmoO
disclosure of cash flows arising from financing
activities is important because it is useful in H$m AcJ go àH$Q>rH$aU _hÎdnyU© h¡ Š`m|{H$ `o B§Q>aàmBO
predicting claims on future cash flows by H$mo \§$S> (H¡${nQ>b Ed§ ~m°amoB§½g XmoZm|) XoZo dmco ì`{ŠV`m|
providers of funds (both capital and H$mo ^{dî` _| hmoZo dmco H¡$e âbmoO H$m AZw_mZ cJmZo
borrowings) to the enterprise. _| ghm`H$ hmoVo h¢Ÿ&
Examples of cash flows arising from \$m`ZopÝg¨J EpŠQ>{dQ>rO go CËnÝZ hmoZo dmco H¡$e
financing activities are: âbmoO Ho$ CXmhaU {ZåZ{c{IV h¢:

(a) Cash proceeds from issuing shares or other (a) eo`g© Ed§ Bgr àH$ma H$s AÝ` BÝñQ¯>_|Q²>g Ho$ Bí`y
similar instruments; go àmßV H¡$e;
(b) Cash proceeds from issuing debentures, (b) {S>~oÝMg©, bmoÝg, ~m°ÝS>²g VWm AÝ` em°Q>© `m bm±J-
loans, bonds and other short or long-term Q>_© ~m°amoB§½g go àmßV H¡$e;
borrowings; and
(c) Cash repayments of amounts borrowed. (c) CYma cr JB© am{e`m| H$m H¡$e _| [ano_|Q>Ÿ&

Difference between Funds Flow and \§$S²>g âbmo Ed§ H¡$e âbmo ñQ>oQ>_|Q>²g Ho$ ~rM AÝVa
Cash Flow Statements
In common parlance, the terms fund and gm_mÝ` ^mfm _| \§$S> Ed§ H¡$e H$mo g_mZ AWm] _|
cash are used in the same sense, yet in
à`moJ {H$`m OmVm h¡ {H$ÝVw AH$mCpÝQ>¨J H$s Ñ{ï> go \§$S²>g
accounting there are some differences between
funds flow statement and cash flow statement âbmo ñQ>oQ>_|Q> VWm H¡$e âbmo ñQ>oQ>_|Q> _| Hw$N> AÝVa h¢
which are discussed as follows: Omo {ZåZ{c{IV h¢:

Bases of Funds Flow Statement Cash Flow Statement
Difference
1. Meaning It is a statement of changes in the It is a statement of changes in the
financial position of the business financial position of the business
due to inflow and outflow of funds. due to inflow and outflow of cash.